Timber harvesting with fluctuating prices

R. Brazee, R. Mendelsohn

Research output: Contribution to journalArticlepeer-review

Abstract

Because of volatility in demand, timber prices tend to fluctuate from year to year. Timber owners know today's price but are uncertain about tomorrow's prices. Traditional Faustmann harvesting ignores these random and annual price fluctuations and prescribes harvests on the basis of expected prices. In this paper, we adapt an asset sale model to forestry and solve for the optimal schedule of reservation prices. When current price is above the reservation price, owners should cut that age class, otherwise they should wait another year. This flexible price harvest policy significantly increases the present value of expected returns over the more rigid Faustmann model. -Authors

Original languageEnglish (US)
Pages (from-to)359-372
Number of pages14
JournalForest Science
Volume34
Issue number2
StatePublished - 1988
Externally publishedYes

ASJC Scopus subject areas

  • Forestry
  • Ecology
  • Ecological Modeling

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